The foreign exchange market has been particularly volatile. EUR/USD has been confined for the most part to its daily (1.3850-1.3980) range. It’s against this backdrop of mixed economic messages that this movement continues. The Canadian dollar continues to weaken, concerns regarding monetary policy in North America dynamic. Trade tensions, especially that between the United States and China, have left analysts scrambling to assess their effects on global currency dynamics.
The RSI for the common currency pair, currently around 37, suggests that it is still in neutral ground. The Moving Average Convergence Divergence (MACD) on the EUR/USD has just printed a sell signal. This means that the pair is vulnerable to further downside pressure. Traders are on high alert, looking ahead to significant economic data and ongoing geopolitical tensions. Any of these indicators would be highly likely to impact the euro’s value against the dollar in a substantial way.
On Tuesday afternoon, the USD/CAD pair was still around the 1.4000 region. The technical indicators suggest more bearish Canadian Dollar action in the short-term. On the charts, this means breaking above all the major SMAs — the 20-, 100- and 200-day Simple Moving Averages. Ethical stakes 10-day Exponential Moving Average (EMA) corroborates this view and shows the presence of a bearish cross. This trend is expected to continue, barring major improvements to the overall economy.
The GBP/USD cross, for instance, just recently climbed to six-month highs above 1.3250. This increase was driven by a massive spike in the foreign exchange market for the British Pound. The positive trend has encountered a fierce headwind. The Greenback’s jaw-dropping comeback is taking weak selling pressure on the GBP/USD exchange rate. While the latter moves toward 1.3200 support area, their retreat traders remain cautious. Additionally, the Trade War with China shows no signs of relenting, further squashing the potential for pound appreciation.
On Tuesday, gold prices shot above $3,200 per troy ounce. This increase is a sign of investor confidence as they seek to balance mounting inflation pressures with global geopolitical turmoil. The market is transfixed on what these trends will mean for forthcoming monetary policy decisions.
Recent data from Canada shows that the country’s inflation rate slowed to 2.3% annually in March, down from 2.6% previously and below analysts’ expectations. The drop in inflation raises concerns about the availability of a strong economy. It further subjects the Bank of Canada’s policy decisions to greater public scrutiny. With uncertainty growing over how President Trump’s aggressive tariff policies may ripple into Canada’s economic outlook, market participants are bracing for potential shifts in monetary policy.
Recent commentary from Commerzbank analysts highlights how difficult and uncertain the current U.S. trade policies are. This unnecessary uncertainty is increasing future inflation risks and eroding goodwill among our partners in the global trading system. Almost every market stakeholder feels this way. They fear the damage trade tensions will do to our long-term economic growth here at harbingers of things to come home and abroad.